Friday 27 November 2020 9:44 am

Capita confirms talks to sell ESS to private equity firm Montagu

UK outsourcing group Capita today said it is in exclusive talks with private equity firm Montagu about the potential sale of its Education Software Solutions (ESS) business.

Capita said it “confirms” the negotiations after media speculation. Yet it said there “can be no certainty” that a deal will be reached.

Read more: Capita finance chief steps down

Bloomberg last month reported that Capita had received lower-than-expected bids for the school technology business.

The sale had reportedly been expected to bring in around £500m to £700m pounds, but offers fell short.

Capita has had a mixed pandemic. In August, the company said its turnaround plan had been torpedoed by the lockdown.

However, its shares soared in November after its finances appeared to stabilise in the third quarter. They had fallen sharply since the start of the pandemic.

Read more: G4S seeks to calm investors as rivals circle outsourcer

Nonetheless, the FTSE 250 firm is pressing ahead with the disposal of units as it tries to cut costs and raise money.

In August, Shore Capital analysts said: “We do see the potential offered by a material cash inflow from the disposal of the education franchise as material in turning the group’s fortunes around.”